Meta is now a metaverse and AI company

Meta recently announced another round of layoffs, cutting 10,000 employees in a bid to improve its efficiency. But buried in CEO Mark Zuckerberg’s statement about the layoffs was a clear message to both Silicon Valley and Wall Street: Artificial Intelligence (AI) is now as important to the company as the metaverse.

Meta’s financial struggles have been largely attributed to falling digital advertising revenue and rising interest rates, and Zuckerberg’s “Year of Efficiency” aims to cut back on spending to appease investors. However, the company’s need for capital to advance its metaverse ambitions means it must continue to compete with rivals like TikTok, which has built its success on its AI-powered For You page.

One thing that is abundantly clear is that AI and the metaverse are front and center to Meta’s long-term strategy, according to Forrester VP and research director Mike Proulx. And the company’s recent emphasis on AI is crucial to its survival.

Meta’s massive investments in its metaverse efforts, which include the development of everything from headsets to software, have resulted in significant losses. In 2021, Meta reported a $10.1 billion loss from its Reality Labs business, which houses the company’s metaverse efforts. In 2022, that number jumped to $13.7 billion.

By investing in AI, Meta hopes to improve its chances of earning capital and appeasing investors while continuing to fund its metaverse ambitions. Zuckerberg has stated that Meta’s single largest investment is in advancing AI and building it into every product.

But the hype surrounding AI is not the only reason for Meta’s renewed focus on the technology. AI is also key to competing with TikTok and its AI-powered For You page, which serves up an endless stream of addictive short videos.

Meta’s emphasis on AI is expected to result in improved Reels recommendations, better advertisement measuring tools, and the addition of large language model (LLM) features into messaging. It will also enable the automation of ad campaigns with creative content generation.

Meta’s future hinges on its ability to build out its AI capabilities, as this will allow it to gain the capital needed to advance its metaverse ambitions over the coming years. While the metaverse may be a long way off, AI is critical to Meta’s survival in the here and now.